Financial Highlights
EYE | into the print
We think management has guided the second half too conservatively calling for flat year-over-year comparable same store sales. After updating the most relevant macro and alternative data series, we think actual year-over-year growth is running in the mid-teens. There are a number of data series that have been in this range year-over-year in 3Q21 despite the tough 2H20 comparisons, and the best model out of our Hedgeye KPI Forecast Tool is running at 18% for 3Q21. From our work on pent-up demand, we don't see these high values as extreme, but rather expect a few more quarters of excess demand adding to an already strong baseline.
We also have only seen a shallow/modest impact on volumes across the US Medical Economy from the Delta Variant. Based on our upside expectations, 2021 and 2022 consensus revenue estimates should move higher from here. We'll monitor data for continued evidence of pent-up demand release in the updates to our key macro and alternative data series as the Delta Variant continues to fade. If we're right, the uptick in estimates will push the stock into the mid $60s, or +18% from here near-term.
The risks will be around the supply chain and raw material costs alongside rising prevailing wages in the Optical Store category, which is showing a +5% uptick year-over-year in 3Q21; this is high but more restrained than other practice areas we're following. EYE has not set a date for their 3Q21 earnings release, but it is typically the first week of November.
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Thomas Tobin
Managing Director
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